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This is a must reading before entering in any foreign exchange transaction especially margin foreign currency trading.

• Commodity Futures Trading Commission (CFTC) was created by United States Congress in 1974 as an independent agency with the mandate to regulate commodity futures and option markets in the United States. The agency protects market participants against manipulation, abusive trade practices and fraud. Through effective oversight and regulation, the CFTC enables the markets to serve better their important functions in the nation's economy—providing a mechanism for price discovery and a means of offsetting price risk.

• National Futures Association ( NFA) National Futures Association ( NFA) - is a a congressionally authorized self-regulatory organization for the U.S. futures industry, provides innovative regulatory programs and services that ensure futures industry integrity, protect market participants and help its Members meet their regulatory responsibilities. NFA also offers a variety of cost-effective regulatory services to electronic markets - services that sustain market integrity, increase user confidence and add to the value of the markets.

• Capital Markets Compliance®, LLC - specializes in providing regulatory guidance for firms that offer securities products as well as banks requiring market risk management reviews. Clients range from one-person retail broker-dealer operations to full-scale multi registered representative broker-dealers, investment advisers, investment bankers, bank affiliated broker-dealers, state and national chartered banks, and financial holding companies. 

• CFTC Forex Advisory: Beware Of foreign Currency Trading Fraud  Updated March 08, 2001

• Commodity Futures Trading Commission Advisory On Foreign Currency Updated February 05, 2001

• CFTC Division Of Trading And Markets Advisory Concerning Foreign Currency Exchange Trading By Retail Investors  pdf format.

In light of the CFMA, the CFTC has issued an Advisory concerning the offering and trading of foreign currency futures and options contracts involving the retail public, and also revised and re-issued its 1998 Consumer Alerton foreign currency trading to help the retail public identify foreign currency trading scams. The CFTC’s Advisory reaffirms that off-exchange trading of foreign currency futures and options contracts with retail customers by a counterparty that is not a regulated financial entity as set forth in the CFMA is unlawful.

In its separate Consumer Alert, the CFTC warns consumers of sales solicitations appearing in newspapers, radio or television promotions, or attractive Internet websites, touting high-return, low-risk investment opportunities in foreign currency trading, and of highly paid currency-trading employment opportunities. The CFTC urges the public to be skeptical of such claims and suggests some "red flags" to look for, and cautionary steps to take, before trading foreign currency products.

• Division of Trading and Markets Advisory Concerning Foreign Currency Trading By Retail Customers - March 2002
• Advisory on Foreign Currency - February 5, 2001
• Consumer Alert: "Beware of Foreign Currency Trading Frauds" - February 8, 2001
• Questionnaire Form - to report information to the CFTC regarding forex (or other commodity futures or options) activities

In addition to this Advisory and Consumer Alerts, the CFTC has also issued the following Consumer Alerts that are posted on its Website at http://www.cftc.gov/cftc/cftccustomer.htm:

• Beware Of Easy Profits From Buying Precious Metals And Other Commodities, July 5, 2000;
• Beware Of Internet Websites Selling Commodity Trading Systems That Guarantee High Profits With Minimal Risks,May 1, 2000; and
• Sales Pitch Based On Seasonal Demand And Other Public Information, March 30, 1998.

Updated May 26, 2001 

 

CFTC GUIDELINES BEFORE YOU TRADE

Basics Of Futures Trading

Trading commodity futures and options is not for everyone. It is a volatile, complex, and risky business. Before you invest any money in futures or options contracts, you should:

• Consider your financial experience, goals, and financial resources and know how much you can afford to lose above and beyond your initial payment.

• Understand commodity futures and option contracts and your obligations in entering into those contracts.

• Understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.

• Know who to contact if you have a problem or question.

The CFTC brochures will provide you with general information about trading commodity futures and options. We encourage you to ask more questions and gather more information before you open an account.

The CFTC also issues consumer advisories to alert the public to warning signs of possible fraudulent activity and offer precautions individuals should take before committing funds. We encourage you to review these advisories before you trade. 

Additionally, you may wish to visit the National Futures Association (NFA) Investor Services web site for more information and related publications.

Broker Registration and Background Information

Before you open an account, you should always check on the company's or individual's status:  

Background Affiliation Status Information Center (BASIC)
Through this online system, National Futures Association (NFA) makes available registration information and futures-related actions contributed by NFA, the CFTC and the U.S. futures exchanges. If you need registration information that's not available in BASIC, you can contact NFA's Information Center at (800) 621-3570.

Administrative Sanctions in Effect List
This list contains the names of firms and individuals that currently have registrations and trading sanctions in effect as a result of administrative and statutory disqualification proceedings.

Reparations Sanctions in Effect Lists
These lists contain the names of individuals or firms who have not paid awards which were levied against them as a result of reparations proceedings. 

Proceedings Bulletin
This bulletin contains information about the Commission's administrative and injunctive enforcement actions and its statutory disqualification-from-registration proceedings. 

US NFA REGULATORY STATUS OF A COMPANY OF INDIVIDUAL

Before you invest your risk capital with any firm, perform due diligence by researching the background of the company and management team, and ensure that your money is appropriately protected.

NFA's Background Affiliation Status Information Center (BASIC).

• Text Of US Commodity Futures Modernization Act of 2000 in pdf format 262 pages

• The Commodity Futures Modernization Act of 2000 as Noted By Simpson Thacher & Bartlett LLP

• The Commodity Futures Modernization Act Of 2000 Hearings

• Testimony of Patrick M. Parkinson,  Associate Director, Division of Research and Statistics Regarding The H.R. 4541, the Commodity Futures Modernization Act of 2000 Before the Subcommittee on Finance and Hazardous Materials of the Committee on Commerce, U.S. House of Representatives July 12, 2000

• Testimony Concerning S. 2697, The Commodity Futures Modernization Act of 2000 By Chairman Arthur Levitt, U.S. Securities & Exchange Commission Before the Committee on Agriculture, Nutrition, and Forestry and Committee on Banking, Housing, and Urban Affairs United States Senate June 21, 2000.

• Subcommittee Reviews Commodity Futures Modernization Act of 2000 Legislation is Designed to Maintain U.S. Leadership in Finance (June 14, 2000)

• Statement of the Investment Company Institute  Submitted to House Committee On Banking and Financial Services on H.R. 4541, the "Commodity Modernization Act of 2000"

• CFTC Proposes Rules Implementing Commodity Futures Modernization Act of 2000